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Download PDF (2.6 A Proposal to End the COVID-19 Pandemic Prepared by Ruchir Agarwal and Gita Gopinath* Authorized for distribution by Gita Gopinath DISCLAIMER: Staff Discussion Notes (SDNs) showcase policy-related analysis and research being developed by IMF staff members and are published to elicit comments and to encourage debate. The views expressed in Staff Discussion Notes are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management. Urgent steps are needed to arrest the rising human toll and economic strain from the COVID-19 pandemic that are exacerbating already-diverging recoveries. Pandemic policy is also economic policy as there is no durable end to the economic crisis without an end to the health crisis. Building on existing initiatives, this paper proposes pragmatic actions at the national and multilateral level to expeditiously defeat the pandemic. The proposal targets: (1) vaccinating at least 40 percent of the population in all countries by the end of 2021 and at least 60 percent by the first half of 2022, (2) tracking and insuring against downside risks, and (3) ensuring widespread testing and tracing, maintaining adequate stocks of therapeutics, and enforcing public health measures in places where vaccine coverage is low. The benefits of such measures at about $9 trillion far outweigh the costs which are estimated to be around $50 billion—of which $35 billion should be paid by grants from donors and the residual by national governments potentially with the support of concessional financing from bilateral and multilateral agencies. The grant funding gap identified by the Access to COVID-19 Tools (ACT) Accelerator amounts to about $22 billion, which the G20 recognizes as important to address. This leaves an estimated $13 billion in additional grant contributions needed to finance our proposal. Importantly, the strategy requires global cooperation to secure upfront financing, upfront vaccine donations, and at-risk investment to insure against downside risks for the world. JEL Classification Numbers: H4, I1, L6, O4 Keywords: COVID-19, pandemic, economic crisis Authors’ E-mail address: [email protected], [email protected] *IMF. We are thankful for inputs and comments from Tobias Adrian, Ravi Anupindi, Oya Celasun, Giovanni Dell’Ariccia, Vitor Gaspar, Amanda Glassman, Vishal Gujadhur, Richard Hatchett, Ken Kang, Petya Koeva Brooks, Michael Kremer, Ceyla Pazarbasioglu, Rafael Portillo, Malhar Nabar, Tristan Reed, Gerry Rice, Christoph Rosenberg, Peter Sands, Tharman Shanmugaratnam, Antonio Spilimbergo, Soumya Swaminathan, Alex Tabarrok, and David Wilson. Among others, we have also greatly benefited from the work of WHO, Gavi, CEPI, UNICEF, World Bank, Gates Foundation, G20 High Level Independent Panel on Pandemics, WTO, FIND, UNDP Wellcome, Unitaid, and public health scholars at Imperial College and Johns Hopkins University. 2 INTERNATIONAL MONETARY FUND ©International Monetary Fund. Not for Redistribution A PROPOSAL TO END THE COVID-19 PANDEMIC CONTENTS EXECUTIVE SUMMARY __________________________________________________ 4 THE GLOBAL RACE AGAINST THE COVID-19 VIRUS ______________________ 8 ACCELERATING GLOBAL VACCINE COVERAGE ________________________ 10 DIAGNOSTICS, THERAPEUTICS, AND PUBLIC HEALTH MEASURES _______ 22 FINANCING ____________________________________________________________ 25 CAVEATS AND UNCERTAINTIES ________________________________________ 26 CONCLUSION __________________________________________________________ 27 INTERNATIONAL MONETARY FUND 3 ©International Monetary Fund. Not for Redistribution EXECUTIVE SUMMARY It is over a year into the COVID-19 pandemic, and new cases worldwide are higher than during any previous phase of the pandemic. Urgent steps are needed to arrest the rising human toll and economic strain from the pandemic that is exacerbating already diverging recoveries. Ending the pandemic is a solvable problem but one that requires further coordinated global action. Many organizations and initiatives have led the effort in the fight against the pandemic, including the Access to COVID-19 Tools (ACT) Accelerator, Coalition for Epidemic Preparedness Innovation, Gates Foundation, GAVI, Global Fund, World Bank, World Health Organization, and World Trade Organization. The proposal in this paper seeks to build on and complement these important efforts. It is well understood that there is no durable end to the economic crisis without an end to the health crisis. Pandemic policy is thus economic policy. Ending the health crisis is critical for global macro and financial stability, which makes it of fundamental importance to the IMF and other economic institutions. Consequently, this paper analyzes multiple dimensions of the fight against the pandemic, including projecting global and cross-country vaccination rates under alternative scenarios. The projections point to highly unequal health prospects well into 2022, which poses severe risks for the world. As public health officials have noted numerous times, “the pandemic is not over anywhere until it is over everywhere.” We propose pragmatic actions at the national and multilateral level to expeditiously tackle the global health crisis. The proposal targets (1) vaccinating at least 40 percent of the population in all countries by the end of 2021 and at least 60 percent by the first half of 2022, (2) while tracking and insuring against downside risks, and (3) ensuring widespread testing and tracing, maintaining adequate stocks of therapeutics, and enforcing public health measures in places where vaccine coverage is low. Building on the budgeting of the ACT Accelerator, we estimate the cost of this proposal to be around $50 billion, which is small compared to the potential benefits of a faster end to the pandemic, estimated at around $9 trillion. Moreover, advanced economies stand to gain around $1 trillion in additional tax revenues, which means that funding this proposal may possibly be the highest-return public investment ever. 4 INTERNATIONAL MONETARY FUND ©International Monetary Fund. Not for Redistribution A PROPOSAL TO END THE COVID-19 PANDEMIC Given that ending the pandemic in a timely manner is a global public good, of the $50 billion total cost of this proposal, there is a strong case for grant financing of at least $35 billion from public, private, and multilateral donors and the remainder by national governments potentially supported by concessional financing from multilateral agencies. The grant funding gap identified by the ACT Accelerator amounts to about $22 billion, which the G20 and other governments recognize as important to address. In addition, at least $15 billion is available from COVID-19 financing facilities created by multilateral development banks. This leaves an estimated $13 billion in additional grant contributions needed to get to the $50 billion identified by our proposal. This additional amount is mainly for raising COVID-19 Vaccines Global Access (COVAX) coverage to 30 percent, procuring additional COVID-19 tests, and expanding at-risk production capacity to insure against downside risks. Importantly, the proposal requires not commitments but upfront financing, upfront vaccine donations, and at-risk investment for the world. It is essential that all necessary financing is available immediately. The key proposed steps (see table below) include: Achieving the vaccination targets 1. Provide additional upfront grants to COVAX of at least $4 billion to increase their vaccine coverage goal from 20 percent to 30 percent for 91 low- and middle-income countries (LMICs): This will help finalize their orders, and activate unutilized vaccine capacity. 2. Ensure free cross-border flows of raw materials and finished vaccines: Such restrictions are jeopardizing vaccine access for billions of people in the developing world. 3. Donate surplus vaccines: We project that at least 500 million vaccines courses (equivalent to around 1 billion doses) can be donated in 2021, even if countries prioritize their own populations. Donations, including for delivery costs, should be done through COVAX so that vaccines are shared equitably and on the basis of public health principles. Insuring against downside risks 4. Make at-risk investments to diversify and increase vaccine production capacity by 1 billion doses in early 2022 to handle downside risks, including from new variants that require booster shots. [$8 billion] INTERNATIONAL MONETARY FUND 5 ©International Monetary Fund. Not for Redistribution 5. Scale up genomic surveillance and systemic supply chain surveillance with concrete contingency plans in place to handle mutation scenarios or shocks to the supply chain. This should be prepared with the participation of multilateral agencies, vaccine developers and manufacturers, and key national governments. [$3 billion] Managing the interim period when vaccine supply is limited 6. Ensure widespread testing, sufficient therapeutics, and adequate public health measures, and prepare for vaccine deployment. [$30 billion] 7. Urgently evaluate and implement (where approved) dose stretching strategies to expand effective supply. [$2 billion] Additional needed measures account for $3 billion. According to our projections, the measures identified in steps 1–3 may be sufficient to achieve the 40 percent vaccination target by the end of 2021 and the 60 percent target by the first half of 2022, if no downside risks materialize. At the same time, steps 4–7 are needed to insure against downside risks and to
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